India’s passenger vehicle sales could grow by 23-25pc while commercial vehicle sales will rise by 34-36pc in April 2021-March 2022 (FY 2022) compared to the prior fiscal, according to rating agency Crisil. The double-digit growth will be supported by improved personal incomes and a robust economy.
Passenger and commercial vehicle segments have contracted by 3-5pc and 19-21pc, respectively in the fiscal ending March 2021 (FY 2021) compared to the same prior-year period.
Two-wheelers will face the least growth with an 18-20pc increase in the period compared to a fall of 12-14pc through FY 2021, Crisil indicated.
Pushan Sharma, associate director at Crisil Research noted that job and salary cuts encountered during the March-May 2020 (Q1 FY2021) have largely been restored in the manufacturing sector. In addition, the IT sector continues to offer pay raises. The higher employment and salary levels will therefore provide additional disposable income for vehicle purchases.
Urban consumers account for 65pc of passenger vehicle sales and 40pc of two-wheeled vehicle sales. The expected improvement in rural incomes will also support passenger and commercial vehicle sales, Crisil indicated.
Commercial vehicles will benefit from improved economic activity due to road infrastructure investments by the government. Moreover, the gradual reopening of offices, schools, and improvements in retail activity should support the purchase of buses. Financing for the higher-priced ticket items should also receive help from improvements in financing in FY 2022.
However, Crisil noted that volume sales of vehicles are unlikely to reach the previous peak encountered in FY 2019. OEM’s increased prices in January and are expected to increase through the year influenced by higher input costs and freight rates.